Banking & Finance, Retail, and Small Business & Startups

‘I was able to … have someone see me’

Turned away by traditional banks, Dominican salon secures expansion loan through private capital fund.

July 12, 2019
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Making Maily's Dominican Salon run are, from left, Sorry Castillo, Clara Guevara and Maily Guevara. Photo by Michael Buck

A salon that has been quietly operating on a busy corridor in Grand Rapids for 15 years will get its long-awaited expansion thanks to a local racial equity lending firm.

Clara Guevara — owner of Maily’s Dominican Salon at 325 28th St. SE in Grand Rapids — recently received a small business loan from Grand Rapids-based Rende Progress Capital (RPC), a firm launched in March 2018 by Eric Foster and Cuong Huynh to provide capital to “excluded entrepreneurs.”

According to RPC, the undisclosed sum will allow Guevara to expand her staff, which currently is at three employees; enhance her marketing and advertising efforts; and upgrade the property for better customer service and access, including adding a larger sign and improving the parking lot.

This is the fund’s first loan to a business owned by a woman of color.

Foster, co-founder, chair and managing director at RPC, said Guevara was referred to his firm through the West Michigan Hispanic Chamber of Commerce, where she currently is enrolled in the Transformando West Michigan small business education program.

“RPC is pleased that Maily’s Dominican Salon is one of our new loan customers based on business considerations, our racial equity standards and the business being led by an entrepreneur heading a household with children,” he said.

“We also value Clara’s dedication to diverse customers, working with us in technical assistance programs to improve and her perseverance through barriers to receive a first-time loan.”

The Business Journal recently spoke to Guevara and her daughter, Maily Guevara, whom the business is named after, with translation assistance from Ana Jose, program manager of the Hispanic chamber’s Transformando initiative.

They said Maily’s, which has staff members who speak both Spanish and English, is a salon that focuses on helping customers achieve healthy, natural hairstyles. Its services include color, perm, relaxer, highlights, wash and set, deep conditioner, keratin, hair extensions, eyebrow waxing and more.

Maily’s stylists use a technique common in the Dominican Republic of working with the blower and the brush, setting hair on rollers and blowing it dry instead of using a flatiron, which can cause heat damage. Though time consuming, a wash and set style can last customers up to a week, Guevara said.

Guevara immigrated to the U.S. from the Dominican Republic with her five kids — ages 2 to 11 years old — in 1994 with help from her mother and brothers, who had already moved to Grand Rapids and helped Guevara and her children get their documentation to come here.

In the Dominican Republic, Guevara owned a beauty salon. When she came to Grand Rapids, she had to work in a factory for eight years to learn enough English to pass a cosmetology licensing exam.

“When I was finally able to obtain my license, I was actually working in a different beauty salon, renting a chair,” Guevara said. “My biggest dream was to be my own boss, have my own salon and really (decide) what I wanted my salon to look like.”

At that time, there were no Dominican beauty salons in Grand Rapids, she said.

By 1995, Guevara had saved enough money to buy herself and her children a home. By 2004, she had purchased a vacant house, renovated it and opened her salon. The building — which is still where her salon is located — is now fully paid off and worth about $200,000.

In the beginning, Guevara never tried to get a traditional bank loan to fund her business because of a unique tradition that exists among Dominicans and some other cultures around the world that allow people to raise capital.

Called a tanda in Spanish, which means “turn” in English, it is an informal loan club in which somewhere around 20 people band together to form a business association of “responsible, awesome, hardworking people” — Jose’s words. The members set mutually agreeable terms, such as all putting $100 into the pot each week for 20 weeks. Each person is assigned a number from 1-20, and when that number rolls around, the person can collect that week’s $2,000 pot to use as they see fit.

According to Maily Guevara, no one in the association makes any interest off the pool, and there are no fees; it’s merely a way to enforce a savings habit that might be next to impossible for a low-income immigrant family without accountability.

Another advantage of the tanda is people can elect to turn over their week’s dole to someone who has an emergency and needs the money more than they do by trading numbers with them.

But the tanda is not designed to help business owners like Guevara raise large sums of capital for improvements. 

For that, she tried to go to other banks for the first time just recently, and she was denied loans. She was told the money she was spending over the years on improvements — sourced from her profits in the salon, the wages from another chair rental job and her savings in the association — were considered losses on paper, and she was considered a poor risk.

“She had enough equity in the building that yes, it could have been easy for her to get the loan, but no one would give her opportunity,” Jose said.

Jose said the banks could have discovered Guevara’s business was more than worthy and capable by “going the extra mile” and looking past the 1099 form, W2s, credit scores and profit-and-loss statement to talk with her, do a site visit and see the business holistically for the success it is.

“For someone to just stand in front of her and say, ‘You are worth absolutely nothing,’ that is just not right,” Jose said.

According to the National Association of Women Business Owners, more than 11.6 million American firms are owned by women, employing nearly another 9 million people and generating $1.7 trillion in sales as of 2017. Of those, 5.4 million firms are majority-owned by women of color.

Foster said he sees Guevara as a tireless advocate for meeting the community’s hair and beauty needs with services that are inclusive of their language and cultural needs, especially since the population of Dominicans is one of the fastest growing among the Hispanic community in West Michigan.

Guevara said she felt overwhelmed by the kindness, dignity and respect with which RPC treated her as she was going through the loan application process, which Jose said took 40-50 hours over the course of a few months.

“Rende was very personable,” Guevara said. “I still had to provide financially, I still had to follow the policies and procedures, but I was able to, for the first time, have someone see me.”

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